Opinion 88-77

This
opinion represents the views of the Office of the State
Comptroller at the time it was rendered. The opinion may no
longer represent those views if, among other things, there have
been subsequent court cases or statutory amendments that bear on
the issues discussed in the opinion.

GENERAL MUNICIPAL LAW, §§801(1), 802(1)(f): A member of a
school district board of education who is also an employee of a
not-for-profit corporation would not have a prohibited interest
in contracts between the district and the corporation for the
provision by the corporation of arts-in-education programs to
the district. However, disclosure would be required under
General Municipal Law, §803.

This is in reply to your letter in which you inquire
whether a school board member, who is also the salaried
director of a local council for the arts, would have a conflict
of interest under the following circumstances.

The local council for the arts is a not-for-profit
corporation which provides arts programs for community
participation. One such program is an arts-in-education
program provided at four schools in the local school district.
The New York State Council on the Arts has contracted with the
local council to provide State funds up to fifty percent of the
cost of the arts-in-education program. Under the terms of this
grant, the school district is required to provide cash or in
kind contributions toward the program.

The statutes relating to conflicts of interest of municipal
officers and employees are contained in General Municipal Law,
Article 18 (§§800-804). Article 18 defines "contract" to
include "any claim, account or demand against or agreement with
a municipality, express or implied * * *" (General Municipal
Law, §800[2]). "Interest" is defined in section 800(3) as a
"direct or indirect pecuniary or material benefit accruing to a
municipal officer or employee as the result of a contract with
the municipality which such officer or employee serves." That
statute also provides that a municipal officer or employee is
deemed to have an interest in any contract of his or her
municipality with a corporation of which he or she is an
officer or employee. Pursuant to Article 18, unless an
exception set forth in section 802 applies, an interest in a
contract is prohibited if the officer or employee has the power
or duty, individually or as a member of a board, to (a)
negotiate, prepare, authorize or approve the contract or
authorize or approve payment thereunder, (b) audit bills or
claims under the contract, or (c) appoint an officer or
employee who has any such powers or duties (General Municipal
Law, §801).

In this instance, the school district is agreeing to
provide funding for the program and the local council is
agreeing to conduct the program. Therefore, it is our opinion
that the local council would have a contract with the school
district for purposes of article 18. Further, the school board
member would have an interest in that contract between the
council and the school district because she is an employee of
the local council. Therefore, since the board member clearly
has powers and duties listed in section 801 in relation to
school district contracts (Education Law, §§1709, 1804), the
interest in the contract would be prohibited unless an
exception applies.

Section 802(1)(f) excepts from the applicability of section
801(1) any contracts "with a membership corporation or other
voluntary non-profit corporation or association..." As noted,
the local council is a not-for-profit corporation.
Accordingly, pursuant to section 801(1)(f), the board member
would not have a prohibited interest in contracts between the
school board and the local council (see Stettine v County of
Suffolk, 66 NY2d 354, 497 NYS2d 329).

The board member, however, would have to comply with the
disclosure requirements of General Municipal Law, §803(1).
Pursuant to section 803, the board member would be required to
disclose in writing to the school board the nature and extent
of an interest in any actual or proposed contract of the school
district. In this instance, that disclosure should include the
fact that she is a salaried employee of the council and the
essentials of the contract between the council and the
district. The disclosure statement must be set forth in the
official minutes of the board.

Although the exception in section 802(1)(f) applies here,
the school district's code of ethics should be examined to
determine whether it contains any pertinent provisions. We
note that codes of ethics must, among other things, contain
provisions relating to private employment in conflict with
official duties and may regulate conduct which is not expressly
prohibited by article 18 (General Municipal Law, §806).

It should also be noted that recent court cases have held
public officials to a high standard of conduct and, on
occasion, have negated certain actions which, although
technically not constituting a violation of article 18, violate
the spirit and intent of the statute, are inconsistent with
public policy, and suggest self-interest, partiality or
economic impropriety (see, e.g., Zagoreos v Conklin, 107 AD2d
281, 491 NYS2d 358; Conrad v Hinman, 122 Misc 2d 531, 471 NYS2d
521; Matter of Tuxedo Conservation and Taxpayers Association v
Town Board of Tuxedo, 69 AD2d 320, 418 NYS2d 638). In this
regard, we note that the school district has contributed funds
to the program and that the program is conducted on school
district property. As a result, it appears that the
effectiveness of the program and decisions as to whether it
should be continued would, in part, be the responsibility of
the board of education. Any such decisions might impact upon
the board member in her position as salaried administrator of
the program. Accordingly, it would seem that the board member
should not participate in board discussions or decisions
relating to the program provided at the district by the local
council.

June 15, 1988
Francis J. Sisca, Esq., Attorney at Law
Port Chester-Rye Union Free School District